SAA gets R3.5bn bailout from Development Bank of SA

SAA is set to receive R3.5 billion bailout from the state-owned Development Bank of Southern Africa, according to the airline’s business rescue practitioners.

The national airline has been in business rescue since December and recently cancelled several flights due to cash flow issues.

The practitioners, Les Matuson and Siviwe Dongwana, confirmed on Tuesday that the Development Bank of Southern Africa committed R3.5 billion in funding to the SAA practitioners, with an immediate drawdown of R2 billion.

“Funding for the restructuring phase after the business plan is adopted is being considered by potential funders,” said the practitioners.

Finance Minister Tito Mboweni had earlier insisted that any bailout should avoid increasing South Africa’s budget deficit.

SAA has not been profitable since 2011, and has debt of more than R12 billion. It has received more than R20 billion in state bailouts over the past three years, which has played its part – along with the R450 billion Eskom debt crisis – to jeopardise South Africa’s credit rating and economic prospects.

Earlier this month the ANC’s secretary-general said it would not allow SAA to go under.

“We believe SAA should be retained as a national airline,” said Ace Magashule at a press briefing on the outcomes of the ANC lekgotla on 19 and 20 January.

The gathering resolved that an investigation should be undertaken into the historical contracts that impacted negatively on the airline.

These included leasing of planes and “evergreen contracts”.

“SAA should be retained as a national airline, which would require substantial restructuring. Cabinet should take the operational decisions needed to achieve that aim,” Magashule said.

Both Magashule and ANC head of the economic transformation subcommittee Enoch Godongwana said restructuring would not necessarily lead to retrenchments.

SAA Technical is among companies accused of having flouted procurement regulations, having had contracts renewed without a tender process.

Magashule said the ANC had resolved that state-owned enterprises (SOEs) should be restructured to avoid being a burden on the fiscus.

(Compiled by Charles Cilliers. Background reporting, Eric Naki)

For more news your way, download The Citizen’s app for iOS and Android.